LCN Sapphire Trustee 1 Limited & Anor v Graham Wiseman & Ors

Norwich Pharmacal relief is exceptional and flexible, but an order must be necessary in, or further, the interests of justice. It is not available merely to give a prospective claimant superior foresight about the viability of a proposed claim or the prospects of recovering a judgment. A claimant need not identify every conspirator or every step in an alleged conspiracy, but relief is unjustified where the claimant’s own case identifies key alleged wrongdoers and the alleged wrongdoing sufficiently to commence proceedings. The jurisdiction cannot be used to perfect or sharpen a proposed claim before it is pleaded.

The claimants, commercial landlords and unsecured creditors in the liquidation of AAH, sought extensive information and disclosure from seven defendants under the Norwich Pharmacal jurisdiction preserved by CPR 31.18. AAH had entered insolvent liquidation after its leases were disclaimed and rent remained unpaid.

The claimants alleged that companies and individuals associated with the Aurelius Group had conducted a corporate restructuring intended to deprive AAH of the means to pay rent, thereby causing loss to the claimants. They sought information to identify further conspirators and clarify the alleged unlawful means conspiracy. They had previously abandoned proposed relief based on sections 423 to 425 of the Insolvency Act 1986.

The central issue was whether disclosure was necessary in, or would further, the interests of justice when the claimants already identified alleged principal conspirators, the alleged unlawful means and individuals said to have been involved.

1. The applications for Norwich Pharmacal relief were refused. The claimants had not established that disclosure from any defendant was necessary in, or would further, the interests of justice.

2. The jurisdiction is exceptional and flexible. It facilitates a prospective claimant’s risk assessment, but does not confer an undue advantage or superior foresight concerning the viability of a proposed claim or the prospects of recovery.

3. A claimant need not know every alleged conspirator or every step said to have been taken in furtherance of a conspiracy. Nevertheless, relief is not necessary where the claimant’s own case identifies unlawful means, the alleged principal conspirators and individuals said to have participated in the relevant corporate decision-making. The claimant may commence proceedings and add or remove defendants later.

4. The claimants’ proposed conspiracy case necessarily implicated at least some of the director and shareholder defendants. That feature reinforced the conclusion that they knew whom they could sue at the outset. Information sought merely to sharpen, perfect or improve the proposed pleading was insufficient justification for an order.

5. The court expressed serious doubts about the sustainability of the alleged conspiracy claim, particularly because the claimants disavowed any case that AAH had suffered improper value extraction. However, the court assumed for present purposes that the claim met the good arguable case threshold.

6. Further objections concerning the interaction between Norwich Pharmacal relief and the statutory insolvency regime, including whether liquidators could be compelled to provide material obtained under their statutory powers, were not determined because the application failed on necessity. The breadth of the proposed orders and the possibility of a fishing expedition therefore required no decision.

7. The claimants retained their rights within the liquidation and could seek to hold the liquidators to account if the statutory functions were not properly performed. The applications were dismissed.